The ‘Half-Full’ Glass Just Tipped Over

The momentum around renewable energy policy recently ground to a halt with recent Alberta government changes.

May 14, 2014

By Marlo Raynolds

My most recent blog on the unique once in a long time, possibly a career, opportunity to see renewable energy policy advance in Alberta suddenly became outdated the week of March 17th. The Associate Minister of Electricity and Renewable Energy stepped away from the Progressive Conservative caucus to sit as an independent, and by the end of the week Premier Alison Redford resigned. With that, any hope of renewable energy policy went away. Right now, we have no clarity on whether an associate minister with the same portfolio will be named and if they will place the same importance on the renewable energy portfolio.

The Minister of Energy, who holds responsibility for the electricity file, has committed to moving the Alternative & Renewable Energy Framework forward. She has started hosting roundtable discussions which is a positive step. This, most likely, means some form of the document will be shared for public discussion, possibly as early as this month.

It is this public discussion that needs to begin. The scale of opportunity for renewable energy remains huge in Alberta and provides an opportunity to demonstrate real leadership to tackle our greenhouse gas emissions, diversify our electricity system, and show the world that we are leaders in energy – including renewable.

The fact is, when the wind blows the entire cost to consumers for power drops.

The metric by which the Renewable Energy Framework will be measured is how well it levels the playing field for utility-scale renewable electricity. Currently, despite wind power being one of the lowest-cost forms of new generation, the competition, natural gas, is able to capture more consumer revenue, especially during peak hours. The fact is, when the wind blows the entire cost to consumers for power drops as shown in the graph to the right. This results in millions of dollars of savings for Alberta consumers every year. However, by reducing the pool price, natural gas power producers see reduced revenue, reduced profit, and therefore continue to very effectively resist any leveling of the playing field for renewable energy in our market. Unfortunately, this means the market does not produce the most optimal price of power for consumers.

Ideally, the most economically optimal solution is maximizing wind power up to what the system can handle. Recognizing the variable nature of wind power this is likely 18-20% of grid capacity – we are currently at about 6%. Natural gas is an obvious compliment to renewables but the introduction of additional wind capacity at varying geographic locations across the province, protects consumers from higher natural gas prices, should they rise in the future. Of course the natural gas sector would like the entire market share.

Success of the Alternative Renewable Energy Framework will be determined by the government’s ability to ensure the electricity market is achieving the most economically optimal outcome for consumers. This will only be possible with significant growth in renewable energy.

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